North Carolina
North Carolina's CON law is a textbook case of regulatory capture. In Charlotte, two hospital systems, Atrium and Novant, control nearly 100% of the market. The state uses its power to pick winners and losers, stifling competition and leaving patients with fewer choices and higher costs.
What CON Covers in North Carolina
North Carolina's CON program is administered by the Healthcare Planning and Certificate of Need Section within the Department of Health and Human Services. The law allows 'affected persons,' including existing providers, to contest applications, creating a high barrier to entry for new competitors.
| Category | Services Requiring CON Approval |
|---|---|
| Facilities | Acute care hospitals, Nursing homes, Psychiatric facilities, Rehabilitation facilities, Hospice facilities, Home health agencies, Ambulatory surgical facilities, Kidney disease treatment centers, Diagnostic centers |
| Beds & Rooms | Acute care beds, Operating rooms, Gastrointestinal endoscopy rooms, Nursing home beds, Psychiatric beds, Rehabilitation beds, Hospice beds |
| Equipment | Major medical equipment (e.g., MRI, CT, PET scanners) |
The Application Process
The review process is lengthy and allows incumbent providers to file a 'contested case' against a new applicant. This legal challenge mechanism significantly raises the cost and time required to bring new services to a community, protecting established players from competition.
| Review Detail | Value |
|---|---|
| Reviewing Agency | NC Dept. of Health and Human Services, Division of Health Service Regulation |
| Application Fee | $5,000 to $50,000, based on project cost |
| Statutory Review Timeline | 90-150 days |
| Can Competitors Intervene? | Yes. Incumbents can file a contested case. |
Market Concentration in North Carolina
In markets shielded by CON laws, a few large players inevitably dominate. North Carolina is no exception, with a handful of large health systems and a single insurer holding significant market power, leading to higher prices and fewer choices for patients.
Charlotte Hospital Market Share (Estimated)
The Charlotte metropolitan area is a duopoly. Atrium Health and Novant Health control the vast majority of inpatient hospital services, leaving consumers with effectively two choices for care. This lack of competition drives up costs and reduces incentives for quality improvement.
"The CON law protects dominant hospitals from competition, and that harms patients."— Dr. Gajendra Singh, whose application for a new hospital was blocked
Case Study: UNC vs. Duke
The state’s power to pick winners and losers is not theoretical. In 2021, the CON process was used to block a major university health system from acquiring new diagnostic equipment, favoring its direct competitor.
UNC Hospitals PET Scanner Application
Date: 2021
Applicant: UNC Hospitals
Competitor: Duke University Health System
Outcome: Application denied in favor of competitor.
In 2021, both UNC Hospitals and Duke University Health System submitted competing applications to acquire a new PET scanner. The state’s healthcare planning agency determined that only one scanner was needed in the service area.
Instead of allowing both qualified providers to offer the service and compete on quality and price, the state regulators engaged in central planning. They evaluated both proposals and ultimately decided that Duke's application was a 'more effective alternative.'
As a result, UNC's application was denied. This case is a stark illustration of how CON laws replace market competition with government decision-making. The state, not patients or referring physicians, decided who was better equipped to provide a critical service. This process limits patient choice and reinforces the market position of state-favored incumbents.
The Agency’s decision to approve the Duke application and disapprove the UNC application is supported by substantial evidence... UNC’s argument that the Agency is not authorized to comparatively review competing applications is without merit.— North Carolina Court of Appeals, 2023
The Rojas Report Take
North Carolina's CON law is a textbook case of regulatory capture, a protectionist racket where the state acts as a bouncer for entrenched hospital systems. In Charlotte, Atrium and Novant have carved up the market, controlling nearly the entire hospital landscape. This isn't a free market; it's a duopoly enforced by state law, and patients are the ones who pay the price in the form of higher costs and fewer choices.
The state's own actions prove the point. When both UNC and Duke, two of the most respected health systems in the country, wanted to offer a new PET scanner, the state didn't let them compete. Instead, regulators played kingmaker, deciding Duke's application was 'more effective' and denying UNC's. This is central planning, not market dynamics. It's a system that rewards political maneuvering over patient care.
With Blue Cross and Blue Shield of North Carolina controlling over 60% of the insurance market, the entire system is a closed loop of consolidated power. The CON law is the linchpin that holds it all together, ensuring that no disruptive innovator can challenge the comfortable arrangement of the state's healthcare titans.
Related Intelligence
About Certificate of Need
Learn about the history and impact of CON laws across the United States.
State DossierKentucky CON Profile
Explore the case of Kentucky, one of the most restrictive CON states in the nation.
National Reform Efforts
An overview of the legislative battles to repeal or reform CON laws.
Data derived from state Department of Health and Human Services filings, public court records, and reports from the Mercatus Center at George Mason University and the National Conference of State Legislatures.